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CC 2013-01-22_08.c. Lease Financing Agreement for Police FleetTO: FROM: SUBJECT: DATE: MEMORANDUM CITY COUNCIL ANGELA KRAETSCH, DIRECTOR OF ADMINISTRATIVE SERVICE¥ CONSIDERATION TO APPROVE A LEASE FINANCING AGREEMENT WITH RABOBANK FOR THE POLICE FLEET PURCHASE JANUARY 22, 2013 RECOMMENDATION: It is recommended the City Council approve a lease financing agreement with Rabobank for the Police Fleet purchase. IMPACT ON FINANCIAL AND PERSONNEL RESOURCES: The total cost to be financed is $271,544 for the Police vehicles. The interest rate is 2.86% and the annual lease purchase amount is $70,784 for 4 years. This is slightly higher than the $69,893 originally approved by Council on November 27, 2012. BACKGROUND: On November 27, 2012, staff presented to the Council an award of bid for lease financing to California First Leasing Corporation. On January 3, 2013, staff was notified by a California First Leasing Corporation representative that the lease with the City was not approved by their bank. The reasons given were due to the City's declining revenues and the loss of the City's Redevelopment Agency. Rabobank was the next lowest bidder and staff contacted them to determine if they would be able to finance the Police Fleet. Staff was notified by Rabobank on January 16, 2013 that the lease was approved. ANALYSIS OF ISSUES: Council approved the replacement of the current police fleet which operates (9) marked Police patrol vehicles. This includes (6) patrol vehicles; (2) canine vehicles; and (1) supervisor vehicl~. The vehicles are being purchased from McPeek Dodge and are to be delivered to the City within the next week. Therefore, the approval of the alternate financing is of utmost importance. Rabobank has approved the lease purchase agreement with the City and is ready to move forward once Council approval is received. Item 8.c. - Page 1 CITY COUNCIL APPROVE A LEASE FINANCING AGREEMENT WITH RABOBANK JANUARY 22, 2013 PAGE 2 ALTERNATIVES: The following alternatives are provided for City Council consideration: Approve staff recommendations to award the lease financing agreement with Rabobank; Do not approve staff's recommendation; Provide direction to staff. ADVANTAGES: The Police Fleet leasing program will allow the City to update the Police vehicle fleet and reduce the upfront costs by allowing payments to be made over four years. DISADVANTAGES: The disadvantage of approving the recommended action is that it will commit the City to a four year lease program for the Police fleet. ENVIRONMENTAL REVIEW: No environmental review is required for this item. PUBLIC NOTIFICATION AND COMMENTS: The Agenda was posted in front of City Hall on Thursday, January 17, 2013. The Agenda and report were posted on the City's website on Friday, January 18, 2013. No public comments were received. Item 8.c. - Page 2